Refinance In California

The reasons to refinance in California are usually different from one homeowner to the next.

Here are the top six reasons why a refinance in California makes sense for homeowners:

  • A lower mortgage rate
  • Consolidate high-interest debt
  • Cash-out to do home improvements
  • Shorten the term length (ie 30-year to a 15-year fixed)
  • To get rid of PMI or MI
  • Moving from an adjustable-rate to a fixed-rate mortgage

There are other reasons to refinance in California however the above six reasons are the most common among homeowners. Below you’ll learn some of the most important aspects of doing a refinance in California.

Our refinance programs cover all of California including San Diego, Anaheim, Long Beach, Los Angeles, Fresno, San Jose, Sacramento, and more.

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An In-Depth Look At Refinancing Your Mortgage

Below you’ll find an in-depth review of various refinance topics.

Reasons to do a refinance: We cover all the reasons for which a homeowner may want to consider a refinance. From obtaining a lower interest rate to obtaining cash out to changing from a 30-year fixed-rate to a 15-year fixed-rate mortgage.

When not to do a refinance: We give specific examples of when homeowners should not do a refinance. If you are moving in the near future or remodeling your home or close to paying off your mortgage; it’s important to know when not to do a refinance.

Important money-saving tips when refinancing: We’ll provide a few tips to help you save money on your next refinance.

A team of professionals: Working with a team of professionals is so important when refinancing your home in California. A mortgage company and a Loan Officer with experience and a solid reputation can save you thousands of dollars.

Refinance loan programs: Picking the right loan program is one of the biggest steps during the loan process. On koloans.com we have all the information needed to make an informed decision on what’s best for your current situation.

Current guidelines: Here is a brief overview of current guidelines for those looking to refinance their home in California. Like mortgage rates; guidelines can change frequently and without notice so if you have a specific question please be sure to ask.

Is now the right time to refinance? We cover the two most important questions you should ask to help determine if now is the right time to refinance.

Less than perfect credit refinance: Here is where you’ll find some good information and facts for those looking to refinance in California even if you have less than perfect credit.

Refinance Rates In California – One of our biggest priorities is to provide our clients some of the lowest refinance rates in California. You can check our current refinance rates below.

Reasons Why You May Want To Do A Refinance

Here we breakdown the six main reasons why you may want to do a refinance.

A Lower Mortgage Rate

Obtaining a lower mortgage rate is one of the main reasons a homeowner would want to consider a refinance in California.

Some homeowners believe refinance rates need to be at least 1% – 2% to consider a refinance however that is not the case.

For example; if you had a 4.50% 30-year fixed rate mortgage (with an original loan amount of 300k) and you had the opportunity to refinance into a 30-year fixed-rate mortgage at 4.00% you could save over $7,000 on your monthly payments (dependent upon your new loan amount) over the first 5 years.

Does it always make sense to refinance with less than a 1% drop in the rate?

No, but it is worth looking into if you can at least drop your interest rate by .50% or more. The value of the refinance also depends on the amount of fees being charged to do the refinance.

Consolidate High-Interest Debt

Paying off high-interest debt like credit cards, personal loans, and car loans might put you in a better long-term financial position.

Mortgage rates are generally much lower than un-secured high-interest debt and sometimes the interest savings is thousands of dollars per year.

One of the most important parts of consolidating high-interest debt with a refinance is to make sure you do not incur new debt after the refinance closes.

Cash-Out To Do Home Improvements

With a refinance in California you have the option of doing a cash-out refinance mortgage to improve the home adds long-term value to the property. At least for some projects.

Before starting a home improvement project be sure to evaluate if the improvements you are looking to do will add value. Taking cash-out to do home improvements is very common however sometimes homeowners don’t realize that it doesn’t always result in additional value to the home.

Shorten The Term Length

If you have a 30-year fixed mortgage rate or a 20-year fixed mortgage rate you may want to consider shortening the length of your mortgage to a 15-year fixed rate or a 10-year fixed-rate mortgage.

The benefits are you’ll have a. lower mortgage rate and pay less total interest however your payments are usually higher. Always keep this in mind when moving to a shorter-term: make certain you can afford the higher payment.

Whatever your reason might be it’s important to review your options before you do a refinance in California and be prudent in your decision-making. A cash-out refinance is an important transaction and using all available tools and resources will make the decision process easier.

Getting Rid of PMI or MI

If you bought a home with less than 20% down and you may want to consider a refinance if home values in your area are high enough and/or your loan balance is low enough.

An FHA home loan in California is a great program for those that need it however when there is an opportunity to get rid of the Mortgage Insurance premium it’s something you should strongly consider. In some cases, a California homeowner can save $200 – $400 per month without even lowering their interest rate if they refinanced their current mortgage.

Moving From An Adjustable Rate Mortgage To A Fixed Rate

If you have an adjustable-rate mortgage you may want to consider a refinance of your current mortgage and lock in a long-term fixed rate.

Adjustable-rate mortgages are popular in California and they provided a lot of benefits however the rate adjusts after a certain number of years. To protect yourself you may want to refinance your current mortgage so that you avoid that adjustment period.

When moving from an adjustable-rate mortgage to a fixed-rate mortgage make sure you keep your closing costs low and review all your options.

home refinance in California

When Not To Do A Refinance

We covered when it was a good time to consider a refinance in California of your current mortgage; now we’ll touch on when it’s not a good idea to refinance.

You’re Moving In The Near Future

If you are moving in the next 6 – 18 months your best option is to probably stick with the mortgage you have unless the interest rate is really high and current rates are really low and you can obtain the lower interest rate with little to no cost.

You’re In The Middle of Remodeling Your Home

If you are currently remodeling your home; you might want to wait until the remodel is done or close to be being done (within a few weeks) before you start your refinance application.

While a homeowner can sometimes obtain an appraisal waiver with a refinance; most of the time you have to get an appraisal done and if the work is significant the mortgage company will request it be completed before the refinance closes.

You’re Close To Paying Off Your Mortgage

If you have less than 10 years you may not want to do a refinance unless the interest rate is significantly lower than what you currently have or there’s a need to do a cash-out refinance.

Just make sure the refinance rates in California are low enough to ensure the new loan makes sense. Other than that you probably want to avoid doing a refinance.

The Costs Associated With The Refinance Are Too High

When doing a refinance you want to not only look at the term, interest rate, and payment but you also want to focus on the costs associated with doing the refinance. Doing a refinance with significant costs is rarely if ever a good idea.

Always do a break-even analysis to determine how long it will take to make up for the costs associated with refinancing and determine if that time frame is acceptable to you.

Refinance Loan Programs And Guidelines

30-year fixed rates, 20 year fixed rates, and 15-year fixed rates are our most popular loan programs in California. We do offer a 10-year fixed-rate mortgage as well however not many homeowners take advantage of the shorter term mortgage due to the high payment.

We offer a wide range of fixed-rate products so that we can secure the best possible mortgage rate.

Adjustable-rate mortgages (ARMs) are another option for clients and the most popular adjustable-rate loan programs seem to be the 7/1 and 10/1 ARMs.

This gives the client a lower rate when compared to a 30-year fixed and has a longer fixed-rate period than the traditional 5/1 ARM. Most ARMs are based on the 1 year LIBOR (as of 2020) and just in case a client prefers a shorter fixed term we do offer the 5/1 ARM as well.

In late 2020 and early 2021 most mortgage lenders switched to the Secured Overnight Financing (SOFR).

Conventional – Conforming Loan Programs

In the mortgage industry, a Conventional loan is any mortgage loan not in the government-backed mortgage loan category (examples are FHA, VA or USDA mortgages). A Conforming loan is a Conventional loan however not all Conventional loans are Conforming loans.

Conforming loans “conform” to Fannie Mae and Freddie Mac underwriting guidelines.

Conventional loans that do not conform to the loan limits of Fannie Mae and Freddie Mac are called non-Conforming. An example is Jumbo mortgage loans, these loans are non-Conforming Conventional loans.

If you have a 700 credit score or higher you probably a good fit for Conventional loans. Or if you are buying rental property you’ll have to go with Conventional financing.

FHA Loan Programs

If you have a credit score below 700 and/or have little equity or a small down-payment the FHA loan program is something you should consider. The great thing about a refinance in California is that you have access to great programs like the FHA loan program.

We cover all the ins and outs of the FHA home loan program and we encourage you to take the time to discover if an FHA loan is right for you. As mentioned before; if you have any questions please be sure to ask. You can use the FHA home loan program to purchase a home or refinance a current mortgage you already have.

FHA loans can only be used for primary residences; 1-4 units. Rental properties are not allowed.

If you buy a multi-unit property you can live in one unit and rent out the other unit(s).

Refinance Guidelines

Mortgage rates vary from state to state and in California mortgage rates tend to be a bit higher than rates in other states.  Not always, but sometimes and it really depends on market conditions. Be sure to receive an update on current mortgage rates prior to locking in terms.

In California lenders generally request an appraisal be done even if you’ve had one completed in the last 3-6 months. For some transactions in California, an appraisal waiver is granted.

California has one of the largest mortgage markets in the entire country. Because of that refinance rates in California are very competitive.

Refinance transactions in California generally take 21-30 days however it could take longer if submission volume is high or if there is a subordination of a second mortgage or equity line.

California refinance volume has been moderate the last few years however it’s expected to increase if mortgage rates remain low in 2021.

Less Than Perfect Credit Refinance

Sometimes people fall on hard times and because of that their credit report and credit score suffers.

It happens in California and all across the country. Maybe it was due to a job loss or maybe it was due to a medical emergency; whatever the reason most homeowners in California want an opportunity to get back on their feet.

Just because you have less than perfect credit doesn’t mean you can’t do a refinance in California.

At JB Mortgage Capital, Inc. we work directly with those that have fallen on hard times and try to help them with improving their financial situation. Having less than perfect credit does not mean you can’t refinance your mortgage.

Here are some basic facts that someone with less than perfect credit may find useful

  • If you live in California and you have a credit score above 600 we have loan programs that might that could put you on a better financial path. There are times we may be able to go below that as well.
  • Unlike other mortgage companies in California, we do not charge excessive points/origination fees.
  • We never charge any junk fees.
  • We can discuss a long-term plan as well to ensure this is not just a short-term solution. When you do a refinance in California it’s important to take the time to make a long-term financial plan.
  • You may be able to add your high-interest credit card debt into your mortgage potentially saving you hundreds or even thousands of dollars per month.

Having less than perfect credit does not mean you’re stuck with what you have when it comes to refinancing your mortgage. Living in California means you have options and we’ll take the time to learn how we can best help you and discuss the options that best suit your needs.

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Is Now The Right Time To Refinance?

For some homeowners in California, the answer is yes and for others, it’s no. The most important two questions a homeowner can ask are;

  • What is my current rate/term?
  • What am I looking to accomplish with a refinance?

If you looking to do a refinance it’s important to ask the above questions.

Previously on koloans.com, we discussed this and more to help our clients figure out if now is the right time to refinance their current mortgage. If you are not taking cash out or trying to lower your term from a 30-year fixed-rate to a 15-year fixed-rate then you generally want to see a .50% or more decrease in your mortgage rate.

There are cases, especially on large loans, where even a .25% to .375% drop might make sense depending on the structure of their current mortgage and the new mortgage loan they’re considering.

If you live in California and have any questions we encourage you to contact us by phone or through our website. We’ll take the time to answer your questions, understand what you’re trying to accomplish, and then find solutions that meet your needs.

Important Money Saving Tips When Refinancing

Here are a few tips to help you save money on your next refinance.

First Money Saving Refinance Tip

Make sure you work with a well-respected mortgage company. It only takes a few minutes to check their Better Business Bureau rating and other online resources. Avoid companies with a questionable reputation.

Second Money Saving Refinance Tip

Ask questions, lots of them!

It’s so important that you fully understand your quote and if you move forward the new loan you’re applying for. You also need to and a clear vision of the process and timeline so make sure you ask questions….after all it is your loan.

Second Money Saving Refinance Tip

Ask the Loan Officer before you apply when the mortgage rate will be locked in.  Knowing when your rate and terms are locked in could save you thousands of dollars and prevent closing delays.

Team of Professionals

Having a team of professionals around you durng the refinance process is essential.

As an example, our team of professionals works hard to make sure each refinance transaction goes smoothly and closes on time. JB Mortgage Capital, Inc. specializes in providing low rates, fast closings, and exceptional service.

You might not know it but there are lots of things that can go wrong during a refinance process and that’s why having an experienced team of professionals in place is so important.

Experienced mortgage professionals listen to what the client’s needs are and then they find solutions.

Important Points To Consider When Refinancing

  • Refinance rates in California change daily; sometimes two-three times a day. If you believe your mortgage rate is locked make sure you receive a written confirmation. Don’t assume it’s locked
  • Be open to suggestions from the Loan Officer on how to best structure the mortgage to your benefit
  • Only send in documentation that is requested. If you can not locate it discuss that with the Loan Officer before sending in additional documentation.

Completing a refinance In California can be easier than a purchase and at JB Mortgage Capital, Inc. we’ll do everything to make sure the process is efficient, smooth, and fast.

Refinance Rates In California

We offer some of the best refinance rates in California. 30-year, 20-year, and 15-year fixed-rates are our most popular terms.

Why are our refinance rates in California so low?

It starts with how we utilize the latest technology to not only help close your transaction as fast as possible but also to help keep our costs down.

We also have a unique way of doing business as well that provides the client with a better overall experience and further reduces our costs when it comes to processing your application.

Most mortgage companies will pass you from one department to the next during the loan process. In some cases, the borrower will work with as many as 4 or 5 different people.

At JB Mortgage Capital, Inc. you will work with one person from loan application to closing. You will always know who to call or email and this allows for a much smoother refinance process. Since we don’t have “loan processors” this also keeps our costs down.

We’re a top-rated mortgage company with the California Better Business Bureau (A+ rating and we are accredited).

We also have a “AAA” rating with the California Business Consumer Alliance (BCA) and five-star ratings on Zillow, Yelp, and Google.

Loan Officer Kevin O'Connor

About The Author

Loan Officer Kevin O'Connor has over 16 years of experience as a Mortgage Loan Originator and is licensed with the state of California and the Nationwide Mortgage Licensing System. He has a top rating with the Better Business Bureau, Google, Yelp, and Zillow. CA DRE #01499872 / NMLS #247447

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